The Commodity Futures Trading Commission (CFTC) and Major League Baseball (MLB) have formalised a landmark agreement as prediction markets come under increasing legal pressure.
The two have signed a Memorandum of Understanding, according to the CFTC in a 19 March press release. The agreement is the first of its kind between a federal financial regulator and a professional sports league.
It represents a major change in the approach to regulating the increasingly popular nexus between sport and financial derivatives in Washington.
A collaborative approach is to be taken on two key areas: integrity in the game and stability in the markets.
CFTC Chairman Michael Selig said: “Through this MOU, the CFTC is well-positioned to add additional tools to protect [the prediction market sector] and its participants from fraud, manipulation, and other abuses.”
Under the agreement the CFTC, which is setting out policy for prediction markets, and MLB will share real-time data and investigative intelligence.
The goal is to identify and neutralise threats, including match-fixing, insider trading, and market manipulation.
Selig describes the partnership as giving the commission “additional tools” to keep these growing markets resilient and transparent.
The landmark deal, seemingly a move that is designed to further the CFTC’s position of autonomous regulatory control over prediction markets, arrives amid fierce legal contestation.
Polymarket becomes exclusive MLB prediction markets partner
Simultaneously, MLB has named Polymarket as its exclusive prediction markets partner.
Polymarket is authorised to use MLB branding and official data on its platform, while the league gains added exposure and a role in shaping the rules governing the billions expected to be traded on baseball this season.
A Sportradar spokesperson told nextpredict.io/: “As the exclusive global data distributor and integrity partner for Major League Baseball, we see a significant opportunity to monetize our products and services in prediction markets. Similar to our approach with OSBs, our commercial agreements will be varied and structured to optimize value.
“Our arrangement with MLB reflects this approach providing Polymarket with MLB data and the opportunity to provide our broad suite of products and services, as well as an ability to provide these to other participants in the prediction markets.”
Political tug-of-war continues
Prediction markets face a deepening jurisdictional battle between federal and state authorities.
The CFTC asserts exclusive jurisdiction over these platforms, classifying their event contracts as swaps under the Commodity Exchange Act.
However, several states have pushed back sharply. Massachusetts, Nevada and Arizona, as well as others, argue the platforms are in effect unlicensed gambling operations.
Arizona’s Attorney General just filed criminal charges against Kalshi, alleging violations of state-wide prohibitions on unlicensed sports and election betting.
The CFTC’s own position has undergone considerable transformation. The agency, under its former leadership, previously sought to prohibit so-called public interest contracts covering gaming and elections.
A series of court defeats changed that calculus. Most notably, a landmark 2024 ruling involving Kalshi forced a strategic rethink.
Under Selig, the agency has withdrawn its earlier prohibitions entirely. It now pursues what officials describe as a “minimum effective dose” regulatory approach.
It wants to build a federal framework that legitimises prediction markets while subjecting them to strict anti-fraud and anti-manipulation rules.
The strategy aims to lift these markets out of the grey area of state gambling law and place them squarely within regulated federal finance.
Whether that ambition succeeds may ultimately depend on the US Supreme Court. A definitive ruling from the nation’s highest bench could be necessary to resolve the jurisdictional conflict once and for all.